Industry news

July 11, 2013: Richard Sandor awarded French Legion of Honor, EU’s Barnier is confident of swaps deal with U.S.; S.E.C. Lifts Ban on Hedge Fund Advertising

US and EU regulators have struck a cross-border swaps regulation deal, while Richard Sandor is honored for his work by the French and Shanghai is allowing foreign commodities exchanges to set up delivery warehouses.

First Read

Congratulations to Chevalier dans l´ordre de la Légion d´Honneur  Dr. Richard Sandor

By John Lothian & JIm Kharouf

Congratulations Doc. We could not be more proud of you for receiving this honor, the highest decoration granted by the French government. Your contributions “to make the world a better place,” as noted by the Consul General of France in Chicago, Graham Paul, have inspired multiples of multitudes in the financial services industry.

We are among those inspired by you, and touched by your genius and inventiveness. It was because of a conversation you had in Burgenstock suggesting Jim start an environmental markets newsletter in the derivatives markets that Jim and I became partners. This led to JLN Environmental Markets (and today JLN Environmental Energy), a greater friendship, an incredible partnership and the creation of John Lothian News and all we have accomplished. We appreciate the push you gave us.

You have set an example and standard that we all strive for in terms of finding ways to make the world a better place through the use of market-based solutions.

Our hat’s off to you on this your latest and greatest honor.

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Richard Sandor Added to Intern Education Series

Stephanie Hammer and Robin Ross Also Added to List of Presenters

We are pleased to announce that Dr. Richard Sandor has agreed to participate in our Intern Education Series as a presenter at the event on July 30.  Additionally, we Stephanie Hammer, author of the recently published “Architects of Electronic Trading” and former CME Group Interest Rate executive Robin Ross have joined our series as presenters.

Doc Sandor will discuss his book “Good Derivatives” and Ms. Hammer will talk about what she learned while researching and writing her book on electronic trading.

Ms. Ross will discuss the early years of eurodollars and the parallels to the new OTC interest rate futures contracts, and the opportunities they present.

We still have room for some more attendees.  You don’t have to be an intern to sign up.  We have also established a $60 Enterprise rate for firms sending 20 or more interns.

Richard Sandor Awarded the French Legion of Honor
Press Release
Dr. Richard Sandor, renowned financial innovator and entrepreneur, was named Chevalier dans l´ordre de la Légion d´Honneur (Knight in the French National Order of the Legion of Honor). The award is the highest decoration granted by the French government, and acknowledges his accomplishments in the field of environmental finance and carbon trading as well as his personal commitment and contribution to the promotion of French-American friendship. This award was conferred upon Dr. Sandor by decree of the President of France. A ceremony will be held in October at the University of Chicago.
“I am deeply honored and humbled to accept this award from the French Republic,” Dr. Sandor said. “My interest in France goes back to my early childhood, inspiring what would become a life-long interest in the country and its culture. I had the privilege of later working in France in environmental finance. To be recognized for the impact these innovations had on French-American relations is truly an honor.”
In bestowing the award upon him, the French government focused on Dr. Sandor’s pioneer work in the design and implementation of innovative and flexible market-based mechanisms to address environmental problems, particularly to mitigate climate and environmental risks and to generate added value from a sustainable use of ecosystems.
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****Aller Richard!

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CME Group Awarded Derivatives Intelligence’s 2013 Exchange of the Year
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it was awarded Derivatives Intelligence’s 2013 Global Derivatives Award for Exchange of the Year.
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**** We are thinking of giving an award for “Exchange of the Millenium.” Who would you nominate?

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New Shanghai free-trade zone to lead push in futures
George Chen and Enoch Yi – South China Morning Post
Beijing plans to allow foreign commodities exchanges to set up delivery warehouses in a move to challenge Singapore and Korea Commodities warehouses may soon be set up in Pudong.
Beijing will soon announce a plan to allow foreign commodities exchanges to set up their own futures delivery warehouses in the mainland’s first free-trade zone in Shanghai, directly challenging Singapore and South Korea’s regional dominance in this business and helping Hong Kong Exchanges and Clearing to expand into commodities trading.
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*****Closer and closer to being a thing.

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How High Is High-Frequency Trading?
The Online NewsHour
By Simone Pathe Traders are increasingly relying on the purchase of early financial data. Photo courtesy of Mario Tama/Getty Images. High-frequency trading represents more than half of all transactions of American stocks these days, but just how fast is high-frequency? So fast, it turns out, that data companies now provide financial data to their most premium subscribers early — as little as …
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****Don’t try the HFT Limbo.

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Newedge Fined for Lax Oversight of Manipulative Trades
Regulators Fine Newedge a Record $9.5 Million for Failing to Police Trades
SCOTT PATTERSON and JACOB BUNGE – Wall Street Journal/Dow Jones
WASHINGTON—Wall Street’s stock-market cops slapped a New York brokerage firm with a record fine for failing to stop computer-driven trading clients who sought to manipulate U.S. markets for nearly four years.
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*A spokesman for parent Newedge Group, which is jointly owned by French banks Société Générale and Crédit Agricole, said the activity “did not involve Newedge’s core futures business.”

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Trading Technologies Launches MultiBroker Trading Solution
Business Wire via Yahoo! Finance
Trading Technologies International, Inc., a global provider of high-performance trading software for derivatives professionals, today announced the production release of its M
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****This also works for brokers with split personalities.

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S.E.C. Lifts Ban on Hedge Fund Advertising
New York Times
The change was mandated by legislation enacted last year. The law also makes it easier for small start-up companies to raise capital without having to comply immediately with S.E.C. reporting rules.
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*****I can see it now. “I would walk a mile for a (hedge fund).”

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Best Hedge Fund Ad Slogans On Twitter
CNBC
The news that the SEC will begin allowing hedge fund to advertise has set Twitter ablaze with #hedgefundslogans.
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**** Tweet of the day, yesterday – “I don’t always pay for underperformance, but when I do, I pay 2 and 20.” – RBIII @RobBartenstein

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Massachusetts regulator subpoenas Wall St firms over sales to seniors
Reuters via Yahoo! News
BOSTON – Massachusetts’ chief securities regulator has hit top Wall Street firms with a blanket of subpoenas, saying he fears elderly people are being targeted for high-risk, alternative investment products. Massachusetts Secretary of the Commonwealth William F. Galvin said on Wednesday subpoenas have gone out to a group of firms including Morgan Stanley, UBS AG, Fidelity Investments …
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****JK – Hello Grandma? Do I have a deal for you.

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S.E.C. Hopes for Validation in Goldman Sachs Trader Case
Now, after striking nine-figure settlements with firms like Goldman Sachs and JPMorgan Chase, the government’s campaign to punish Wall Street over risky investments sold before the crisis will culminate in an unlikely way — with the civil trial of a 34-year-old Frenchman, Fabrice P. Tourre.
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**** This trial will be FABulous.

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Hedge Fund Fees: Exotic Expenses
Investopedia via Yahoo! Finance
Warren Buffett made a bet with Protégé Partners, a fund of funds hedge fund manager, that the S&P500 would beat a group of hedge fund managers selected by Protégé. The bet officially started on January …
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*****Warren Buffett, a betting man?

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Current Bloomberg Businessweek Cover

 Hedge Funds Are for Suckers
Sheelah Kolhatkar – BloombergBusinessweek
At the height of the financial crisis in 2008, a group of famous hedge fund managers was made to stand before Congress like thieves in a stockade and defend their existence to an angry public.
The gilded five included George Soros, co-founder of the Quantum Fund; James Simons of Renaissance Technologies; John Paulson of Paulson & Co.; Philip Falcone of Harbinger Capital; and Kenneth Griffin of Citadel.
http://jlne.ws/131Mhe2
*****Businessweek hits a new low with its cover.  Enough said.

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Lead Stories

Cross-Border Swaps Deal to End U.S., EU Regulation Overlap
Jim Brunsden & Silla Brush – Bloomberg
U.S. and European Union financial regulators broke a deadlock over rules for the $633 trillion global swaps market, saying the accord will protect banks from overlapping requirements and additional costs.
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Deal Reached to Rein In Overseas Trading
BEN PROTESS – NY Times
The contours of the plan, the people briefed on the matter said, suggest that firms like Goldman Sachs International and Citigroup’s London branch will face a wave of new scrutiny, a sticking point for Mr. Gensler.
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A Call to Battle on Bank Leverage
By SIMON JOHNSON – NY Times
On Tuesday, federal banking regulators opened an important new phase of the debate on how safe very large financial institutions should become. The next round of argument will be intense; the focus has shifted to the specific and high-stakes question of how much leverage big banks can have – i.e., how much of each dollar on their balance sheet they should be allowed to fund with debt rather than with equity.
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US banks to shuffle assets over leverage rules
By Tom Braithwaite, Tracy Alloway and Dan McCrum in New York – FT
US banks believe they will be able to meet a new regulatory requirement on debt levels by shuffling assets between their subsidiaries and using other “optimisation” strategies to reduce the amount of leverage they report.
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The silver HFT program
Resource Investor
HFT programs now have enough money behind them to destroy real wealth or productive capital in microseconds if they simultaneously deal in large enough volume to cause a flash crash in a market they are permitted to operate in.
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JPMorgan, Wells Fargo Shuffle Riskiest $38 Billion Amid Bond Boom
TheStreet.com
NEW YORK — JPMorgan and Wells Fargo took $37.9 billion of their riskiest assets in from the shadows in the first quarter as a rise in trading activity convinced them the assets were easier to value. Given a sharp second quarter reversal in the bond market, it bears watching in upcoming earnings whether a couple of the nation’s largest financial institutions made the right call. In …
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Bernanke: Financial crisis taught Fed critical importance of maintaining financial stability
Minneapolis-St. Paul Star Tribune
WASHINGTON — Chairman Ben Bernanke says the 2008 financial crisis showed the Federal Reserve that it must strengthen its approach to both regulation and interest-rate policies.
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Bernanke: Crisis showed need for stronger policies
Associated Press via Yahoo! News
WASHINGTON — Chairman Ben Bernanke says the 2008 financial crisis showed the Federal Reserve that it must strengthen its approach to both regulation and interest-rate policies.
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How Libor Rounds Out Jeff Sprecher’s Iconic Portfolio
Jacob Bunge – Dow Jones
Jeff Sprecher isn’t letting up in acquiring the pillars of global finance. The man who five years ago was at the helm of a largely-unknown U.S. energy exchange company has now added the world’s most-watched interest rate benchmark to a portfolio that’s set to soon include the iconic New York Stock Exchange NYX +1.39% too.
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INTL FCStone Modifies Structure of Proposed Relationship With Cleartrade Exchange Due to Regulatory Environment
GlobeNewswire via Yahoo! Finance
NEW YORK and SINGAPORE — INTL FCStone Inc. today announced that it does not, in the short term, intend to acquire an interest in Cleartrade Exchange, the commodity futures exchange headquartered …
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Bear Stearns Liquidators Sue Credit-Ratings Firms
Nasdaq
Bear Stearns Liquidators Sue Credit-Ratings Firms
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Blackrock CEO Fears New Bank Rules Will Speed Treasury Selloff
TheStreet.com
NEW YORK — The long-anticipated selloff in U.S. Treasury bonds hasn’t been that disruptive to markets — yet. But that could change as banks move to comply with proposed new capital rules announced by U.S. regulators Tuesday, according to BlackRock Chairman and CEO Larry Fink. Fink told Bloomberg TV banks had been incentivized to hold U.S. Treasuries because Basel 3 capital rules …
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Regulatory

Ready For Hedge Fund Commercials? SEC To End Ad Ban
Forbes
Imagine driving down the highway and seeing Bill Ackman, Carl Icahn or Steve Cohen on a billboard asking you for money for their next fund.
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Hedge funds can now advertise. Why it matters
CNN Money
The SEC today voted to let hedge funds and others “generally solicit.” What does that mean?
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Regulators Finally Start Standing Up to Big Banks
Time Magazine
As we near the three-year anniversary of President Obama signing the Dodd-Frank financial reform bill into law, the too-big-to-fail banks that percipitated the crisis are bigger and more powerful than ever. Though the new legislation does arm regulators with more powers that may prevent a large financial institution’s failure from bringing down the broader economy, experts warn these tools are …
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Traders’ tools turn tables on dodgy deals
By Brooke Masters – FT
Set a thief to catch a thief, the adage goes. When it comes to catching insider traders, the UK financial watchdog hasn’t gone quite that far, but it is turning to trader’s tools.
Under the leadership of Patrick Spens, a former Citigroup and hedge fund manager, the market monitoring division of what is now the Financial Conduct Authority has launched a data-based attack on suspicious trading.
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Risk council designates AIG, GE Capital for tougher oversight
Reuters via Yahoo! Finance
The U.S. financial risk council on Tuesday said it has designated American International Group and GE Capital as systemically risky, bringing them under stricter regulatory oversight. The Financial Stability …
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EU’s scaled-down agency to shut banks fails to please Germany
Reuters via Yahoo! Finance
By John O’Donnell and Annika Breidthardt BRUSSELS/ BERLIN – The European Commission outlined plans to set up an agency to salvage or shut failing euro zone banks, a long-awaited scheme immediately …
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The FSA’s final report in numbers
Matt Turner – Financial News
The last set of annual figures from the now disbanded Financial Services Authority show a multimillion-pound contribution to its pension scheme; details frozen monies linked to ex-currency trader Alex Hope; and reveals the termination package of former CEO Hector Sants.
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Zealand’s Financial Markets Authority CEO Announcement – Sean Hughes Will Not seek Re-Appointment For A Second Term
Press release
The Financial Markets Authority (FMA) today announced that CEO Sean Hughes will not seek re-appointment for a second term as Chief Executive. He will continue in his role until the end of the year.
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Exchanges & Trading Facilities

London Metal Exchange nears prize of warehouses in China
Reuters via Yahoo! Finance
By Polly Yam HONG KONG – China’s top planning body is preparing to let foreign exchanges open commodities warehouses in free-trade zones, sources with government links said, which would grant …
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Hedge Funds & Managed Futures

People Are Starting To Wonder If Bill Ackman Can Raise $1 Billion In 10 Days
Business Insider
BOSTON – Hedge fund manager William Ackman’s strong returns have made him into one of Wall Street’s biggest managers, but even he may struggle to raise $1 billion in the next week for a single stock fund whose target he won’t identify, say investors.
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ANALYST: There’s No Way Bill Ackman Is Targeting FedEx
Business Insider
Yesterday the rumor was that Bill Ackman, activist hedge fund manager extraordinaire, is raising money to buy a significant stake in a major American company, and that company is FedEx.
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The funds that (fund of) fund managers like
Mark Cobley – Financial News
What are the best funds run by London’s asset management industry? There are many ways to answer that question, but an interesting one arrived this week from analysts Lipper, which looked at the most popular funds among the professional selectors who run funds-of-funds.
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SkyBridge Capital, Korea’s Woori Financial Group Form Partnership
Isabella Steger – Wall Street Journal
U.S. fund of hedge funds SkyBridge Capital LLC is entering South Korea by striking a partnership with Woori Financial Group 053000.SE +5.61%, signaling that foreign funds may finally get a foothold in a country skeptical of the hedge-fund industry.
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Banks & Brokers

GFI Group Inc. Schedules Second Quarter 2013 Earnings Release and Conference Call
PR Newswire via Yahoo! Finance
NEW YORK, July 10, 2013 /PRNewswire/ — GFI Group Inc. announced today that it will release its second quarter 2013 financial results on Thursday, July 25, 2013 after the U.S. market close. …
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UBS Boots Bank of America from Top Spot
The Motley Fool
UBS has reasserted itself as the No. 1 global private bank, to the detriment of B of A.
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Technology

OMEX Trading Systems Adds to Ensemble Cast of Wall Street Tech Veterans
GlobeNewswire via Yahoo! Finance
Broker-Neutral Vendor Responds to Surge in Demand for All-In-One Solutions
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FrontRange and Bechtle Expand Cooperation in Europe
Business Wire via Yahoo! Finance
Following more than a decade of successful collaboration in the German market, hybrid IT service management provider FrontRange and Bechtle, a leading German IT services provider, have agreed to extend their joint activities to additional European countries.
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Enforcement

Barclays Unit Wins Dismissal of Regulator’s Lawsuit
Bloomberg
A Barclays Plc investment-banking unit won the dismissal of the National Credit Union Administration ’s lawsuit accusing it of making misleading statements about mortgage-backed securities to credit unions that later failed.
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